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Lobster Price Collapse Concerns Aired
by Brenda Tredwell
“They’re busy re-inventing the entire (US) economic system in Washington,” according to Charles Colgan, economist, of the University of Southern Maine. “It’s a consumer-led recession. Buyers have lost confidence in the future, they’re down-sizing, not spending. Supply is ‘chock-a-block full of lobsters’ so “while closing down the fishery for a couple weeks, restricting supply won’t work–increasing demand might,” said Colgan. Lobsterman Jon Carter of Bar Harbor said, “We need to make Maine business-friendly,” while Tad Miller of Matinicus thinks the industry should be “working with Canada, all the way to NJ.” “Forget about price per pound,” said John Norton of Cozy Harbor Processing, “We’ve bottomed out. The market has to clear before we can do anything,” which includes moving stored lobster. Norton claims the “perfect storm” that’s hit the industry is comprised of five issues – 1. An economic slow-down with spikes in oil price causing buyers to cut inventory. 2. Canada’s massive supply (up from 2007 by 15 million lbs.) being released onto a smaller market. 3. Lower priced Caribbean lobster tails competing for markets. 4. Low consumer confidence 5. The (global) banking crisis. A worker at Portland’s Siam Restaurant, said, “I can predict market spikes without ever looking at the index (stock exchange) by the number of people coming through the door.” Gouldsboro seafood dealer Dana Rice warned against “Over-reacting, or by asking the legislature to step in” and “create some kind of regulation that will hurt us down the line”–such as closed seasons, whereas cutting back on hauling can be voluntary. Some want to be ordered to stop. Rice mentioned there were “Guys in eastern Maine hauling even faster–9 and 10 days in a row,” saying, “we’re creating a problem for ourselves. Haul 2-3 days–slow down.” Rice likened the turn of events to Hurricane Katrina. “This is a frigging disaster. It’s as if 120 mph winds hit our industry.” The bottom line is, lobstermen still catching up on payments from last year had a rough season so far, including record rainfall and high water temperatures, fuel costs, and now they’re looking at whale safety rope replacement next spring, stock assessments, and bait costs/shortages coming down the line. “The whole industry is flawed,” said lobsterman and Maine Lobstermen’s Association president David Cousins, “the way we do business.” He cited a need to target hardshell lobster. “We need to fish smarter,” he concluded. One fisherman noted, “Guys went into the season against a wall– landings are down, this went from a 90 to a 60 million pound fishery”–causing harvesters in attendance to ask “where’s the math on that,” given the price drops. MLA’s Patrice McCarron worried what would happen if the market ends up being $2.50 in the spring. Dana Rice cautioned, “Don’t put an artificial roadblock in place. Let’s get through this and see what happens,” which drew response from business and banking consultants who were there to advise, as financial relief needs to come for harvester snow. “It’s not our tradition to ask for help,” said Leila Percy, Rep. Pemaquid. Many expressed concern about their financial situation and the need for some kind of financial relief was apparent. The Community Supported Agriculture (CSA) model, which has been applied to groundfish marketing by the Midcoast Fishermen’s Association uses a local approach, rather than a world market model. Recent concern regarding local food supply has been addressed by Maine Feeds Maine. Nancy Smith, whose family runs a Bar Harbor Dairy, touched on issues that farm and fishing industries share. Concern regarding this fall’s bait supply set in around August, 24 when the herring catch crept towards 25,000 MT. (the 2008 herring quota was cut to 45,000 MT) On Sept. 29, there was no herring in Boothbay – at Swan Island, it cost $38. Meanwhile, price per pound dropped. On October 6, the Starlight was in at O'Hara’s sitting heavy on the waterline, in Rockland. To local lobstermen dependent on herring bait, it felt like Christmas Day. About 70% of Maine’s lobster catch is landed during a 10-week period in the fall. Dana Somers of the Lobster Promotion Council said, “Over 70% of October’s catch usually goes into storage. In October of 2006, 116 million lbs. was harvested.” He later said, "Canada sells 100 million lbs. of processed lobster in the US, I say, let’s process it here.” It bothers him that US lobster trucked out at $2.50 lb. and is shipped back as a value-added product. Hannaford and Shaw’s are working on local promotions, but it’s a short-term solution. “We have two products here–hardshell and softshell–with a 40-50% markup on hardshells,” said Somers. While there’s reluctance to “tarnish the Maine brand” which has developed a “premium image” with a low end sales pitch, there is a “high-perceived market” value for lobster in other parts of this country. Cappy Sargent of Milbridge added, “Our market’s right here – we don’t have to go global all the time with everything.” To which Somers replied, “You’re not our customer. The Lobster Promotion Council is working on strategies for establishing new lobster markets– both domestic and export.” An estimated 80% of the US catch is sold yearly to Canadian processors. According to Somers, “Canada’s taken up a lot of slack from us. It’s a 22-24 million lb. a year live market (for the US) and then, there’s the European and Japanese markets. So don’t knock the Canadians–if they weren’t around in the late 90’s or right now, prices would’ve been a lot lower.” Lobsterman Jon Carter of Bar Harbor said he wants to see the federal government “buy a million lobsters, and send them to the troops.” Carter also said, “We were riding a fictitious high–who in the world knew the whole world would fall apart (financially) in two months? When we were doin’ good, guys bought boats, trucks, built houses, had babies, now they’ve got to pay for them. “It’s not ‘I’m gonna lose my boat’ anymore, now it’s “Oh, I’m gonna lose my bedroom’ ”–that’s why we work so hard.” F inancial Information Sources Finance Authority of Maine (FAME - 800-228-3734) is able to help with seasonal repayment schedules. Eastern ME Development Corp. offers financial counseling and loan programs. The Dept. of Economic and Community Development (DECD 207-443-5790) has information on agencies offering financial guidance. The Small Business Assoc. (SBA 207-622-8274) helps with disaster-relief loans, loan insurance, and in locating resources DECD and FAME bankers have talked with Sen. Olympia Snowe in conjunction with SBA regarding assistance for fishermen, and plan to travel to zone meetings. |
